Setting Up a Small Business in Dubai

Dubai— the land with unprecedented avenues— is home to an ever increasing number of expats. Mostly, Dubai is the answer for those looking for brighter future prospects for themselves and their families. It affords numerous opportunities to earn well.

As compared to other Middle Eastern counties, operating environment for businesses in Dubai is very profuse and attractive. It is considered that future of Dubai depends on small business growth. A successful business starts from conceiving a good idea and converting the idea into a profitable and sustainable entity. And to do so in Dubai, you have to carefully contemplate a few factors.

It is also worth noting that Dubai has stiff licensing and registration standards and having a significant amount of start-up capital is a must for operating in Dubai.

So, if you are looking to set-up a small business in Dubai, considering three major components detailed below is a must. These factors can impact a business’ profitability and sustainability directly.

Knowing your business
There is so much that contributes in making a business a hit, factors like in-depth research of the demand for product or service that you are offering, comprehensive knowledge of the operative environment, and a reliable business plan, play an important part.

It is important to ask yourself is your business plan worthy enough to attract investment partners? Is there a demand for my product? What is your competitive edge?

Social media tools can be very helpful in determining customer attitudes towards your offering. Thorough and all-inclusive research will definitely benefit your business in the long run. Also plan to spend some money on advertising. Although these factors will increase the initial costs but guarantee savings in the long run.

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Setting up a local partnership
If a business plans to operate outside UAE’s many free zones it is bound to make a local partnership. It is this local partner who controls the company by owning a major share in it. There are certain exemptions that these local partners enjoy. Like it’s not bound to make a capital contribution.

Financial feasibility
In order to register a business the Ministry of Commerce needs a proof of financial investment. If you don’t have any record of you finances in Dubai, you should try to find your own finances with the help of a bank or by other means.
Once you are sure that your business stands a chance, that it is a viable option and can be turned into a successful venture. You should move on to finding ways to get it going.

Seven basic categories of business organization have been defined by UAE Commercial Companies Law and Federal Law. The features that differentiate these organizations are minimum capital requirements, shareholders and procedures.

Limited Liability Companies
Most start-ups opt to operate as a limited liability company. Limited liability companies are generally referred as LLCs. This arrangement can comprise of two to fifty people whose liability in the company is limited to their respective investment in the company.

A local sponsor with a controlling 51% (fifty-one) stakes is required and foreign equity in the company is limited to 49%. One must have at least capital investment of AED 300k (USD 82k) for launching an LLC in Dubai. An LLC can be setup following the steps given below.

• Pick a meaningful name for your company and get it approved by the Licensing Department of the Economic Development Department.
• Draft a Memorandum of Association. This document regulates the external activities of the company. The MoA has to be notarized by a Notary Public in a Dubai court.
• Apply at Commercial register at the Economic Development Department.
• After you get the approval, the Economic Development Department will issue a license and the company’s name will be entered into the Commercial Register. The MoA will be published in the Ministry of Economy and Commerce’s Bulletin.
• Lastly you should list the company with the Dubai Chamber of Commerce and Industry.

Professional Companies
It is professional firm that offers professional or artisan services. In this type of organization you can only have a limited number of employees. However, having a 100% foreign ownership or sole proprietorship is permissible. A local service agent, a national of UAE, must be there to obtain employee visas, licenses and labor cards. However, that UAE national must not have a direct involvement in the business.

In order to increase investment the government of Dubai has set up free zones. A company established in a free zone has a unique legal structure and is considered as offshore a company for legitimate reasons.